COURT FILE NUMBER: BK-33-2837554, BK-33-2837555
DATE: 2023/11/21
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF GOVINDH JAYARAMAN AND STACEY JANE JAYARAMAN
OF THE CITY OF OTTAWA, IN THE PROVINCE OF ONTARIO
RE: Pascal Tellier and Firstpower Investments Inc./Les Investissements
Firstpower Inc., Plaintiffs
AND
Govindh Jayaraman, Defendant
BEFORE: Justice Stanley J. Kershman
COUNSEL: Gordon Douglas, counsel for the Plaintiffs
Eric Dwyer, counsel for the Defendant, Govindh Jayaraman
HEARD: August 16, 2023 in Ottawa
DIRECTIONS TO LICENSED INSOLVENCY TRUSTEE
[1] This matter was before the court on a motion to lift the stay of proceedings pursuant to section 69.4 of the Bankruptcy and Insolvency Act. At that time, various evidence was presented to the court.
[2] The court is responsible to ensure that the provisions of the BIA and the integrity of that Act are complied with even if the Bankrupt is discharged.
[3] The court notes that at the motion to lift the state of proceedings, certain evidence used on the motion raised concerns. These concerns are to be addressed by the Licensed Insolvency Trustee.
[4] The court is aware that Mr. Jayraman (“Bankrupt”) has been undischarged. The Licensed Insolvency Trustee remains on discharged. Evidence is required from the Bankrupt under oath and from any other source in relation to the items set out below.
Net Worth Statement and Statement of Affairs
[5] A Net Worth Statement was prepared by the Bankrupt dated December 13, 2021, which is approximately two years after certain loans by the Plaintiffs were made and approximately one year before the assignment into bankruptcy.
[6] In the Net Worth Statement, the Bankrupt indicated that he had an insurance policy with a cash surrender value of $312,222 and a retirement account of $21,278.
[7] In the sworn Statement of Affairs, dated June 9, 2022, which is approximately six months after the Net Worth Statement is prepared, the Bankrupt, when asked if he has within the 12 months prior to the date of the initial Bankruptcy event ever, either in Canada or elsewhere, sold or disposed of any of his property, the answer was “no”.
[8] In addition, the Bankrupt was asked if he had made any payments in excess of regular payments to creditors, where he said “yes”. That answer referred to approximately $1,600 paid to Chris and Marguerite Fox, who apparently were creditors of the Bankrupt.
[9] When asked if any property had been seized by a creditor, the answer was “no”.
[10] In the Statement of Affairs, the Bankrupt is asked within the five years prior to the date of the initial bankruptcy event, has he either in Canada or elsewhere sold or disposed of any property, the answer to that question was “no”.
[11] A further question was asked within that same timeframe whether the Bankrupt had made any gifts to relatives or others in excess for $500 and the answer to that was “no”.
[12] The court notes that, there is no mention in the Statement of Affairs about what happened to the cash surrender value of the life insurance policy or to the retirement account.
[13] In addition, the Bankrupt indicated that he owned a BioDiesel company and that company was still in existence, had not been sold, and was not either of the two corporations that he was involved with being IMBA or ASUS. No mention of the BioDiesel company is made in the Statement of Affairs.
Lease for the Property at 23 Davidson Drive, Ottawa, Ontario
[14] A cross-examination of the Bankrupt by the Moving Parties on the motion to lift the stay of proceedings was held on June 28, 2023. Undertakings were provided by the Bankrupt at that time. One of the answers to the undertaking concerned lease agreements between the Bankrupt and 1202525 Ontario Inc. Two lease agreements were provided.
[15] The first lease agreement was between the Bankrupt and his wife, who also went bankrupt, as Tenants and 1202525 Ontario Inc. as Landlord dated February 1, 2016. This lease began on April 1, 2016 and ended on January 31, 2017. That lease agreement provided that the rent was $2,000 per month.
[16] The second lease agreement is between the Bankrupt and his wife as Tenants and 1202525 Ontario Inc. as Landlord. That lease agreement is for the same property being 23 Davidson Drive, Ottawa, Ontario. The term of the lease starts on September 1, 2018 and ends on August 31, 2020. The rent in that lease is $7,000 per month.
[17] The Statement of Affairs of the Bankrupt indicates that the rent for 23 Davidson Drive as of the date of bankruptcy being June 2022 was $2,000 per month.
[18] Based on the evidence, the court finds that the rent increased from $2,000 per month to $7,000 per month for a period of at least the term of the lease and possibly longer. The rental increase would have been at a time when the Bankrupt had obtained the financing from one or both Pascal Tellier and Firstpower Investments Inc./Les Investissements Firstpower Inc. At some point in time, it is not clear but the rent decreases from $7,000 per month to $2,000 per month as at the date of bankruptcy.
Analysis
[19] Any interested person in any proceedings shall act in good faith and with respect to these proceedings. Section 4(1) BIA.
[20] If the court is satisfied that any person fails to act in good faith, on application by any interested person, the court may make any further order that it considers appropriate in the circumstances. Section 4(2) BIA.
[21] In this case, the court finds that it is the interested person on behalf of the creditors of the estate.
[22] As stated previously, one of the objectives of the Bankruptcy and Insolvency Act is for the court to maintain the integrity of the BIA.
Evidence Required by the Court
[23] The court has concerns about the aforesaid matters and orders that the Licensed Insolvency Trustee investigate the affairs a Bankrupt by way of examination of the Bankrupt under oath as they relate to:
a. The cash surrender value of the insurance policy, as set out in the Net Worth Statement and not mentioned in the Statement of Affairs;
b. The status of the retirement plan which is mentioned in the Net Worth Statement and not mentioned in the Statement of Affairs;
c. The particulars of the BioDiesel company, which appears to remain in existence and which is not mentioned in the Statement of Affairs;
d. The particulars of why the rent for the property at 23 Davidson Drive increased from $2,000 per month to $7,000 per month for a period of time and then decreased back to $2,000 per month as of the date of bankruptcy. Since the Bankrupt’s father is either an Officer, Director, and/or Shareholder of the Landlord, there is a potential for this being a questionable transaction; and,
e. The Trustee in Bankruptcy is to receive a copy of this decision, and is to provide a written report to the court within 60 days as to the status of these matters.
[24] A copy of this endorsement shall be forwarded to the Office of the Superintendent of Bankruptcy.
[25] Order accordingly.
Mr. Justice Stanley J. Kershman
Date: November 21, 2023
COURT FILE NUMBER: BK-33-2837554, BK-33-2837555
DATE: 2023/11/21
ONTARIO
SUPERIOR COURT OF JUSTICE IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF GOVINDH JAYARAMAN AND STACEY JANE JAYARAMAN
OF THE CITY OF OTTAWA, IN THE PROVINCE OF ONTARIO
RE: Pascal Tellier and Firstpower Investments Inc./Les Investissements
Firstpower Inc., Plaintiffs
AND
Govindh Jayaraman, Defendant
COUNSEL: Gordon Douglas, counsel for the Plaintiffs
Eric Dwyer, counsel for the Defendant, Govindh Jayaraman
DIRECTIONS TO LICENSED INSOLVENCY TRUSTEE
Kershman J
Released: November 21, 2023